West Michigan Estate Planning Center

Using a Trust to Avoid Probate, Creates Other Problems – West Michigan

T he probate process can be expensive and time-consuming. However, there are instances when strategies used to avoid probate create more problems.

There are a number of efforts underway in several states to help people avoid probate, according a recent article in The PV Democrat, “Avoiding probate - panacea or problem.” This is especially true in progressive states like California.

We’ve all read articles that discuss the role of trusts in estate planning that frequently advise you to make every effort to avoid probate. But this isn’t always the right answer.

Probate is a court process that’s designed to protect your intentions for the distribution of your assets after death. It gives finality to creditor claims against the estate and authorizes the probate court to insure compliance with a decedent’s wishes. It requires that an individual’s financial assets be defined, insures that they’ll be given to the proper persons and provides a procedure for protecting the distribution that was planned by the decedent.

There are some risks in using a trust rather than going through probate. They include these items:

Legal Contests. When someone is left out of a trust, or if the trust assets are improperly restricted in their use, then he or she can initiate a contest. Undue influence is frequently alleged when a trust is created just before death.

Probate Protections. A will requires two or more witnesses, written testimony of the witnesses, and must be notarized in some states. However, a trust can be created with just a signature and even implied in some instances with no written document. Therefore, it may be easier to create an improper trust than an improper will.

The Potential for Mistake and Misuse. If the document is a trust, a transfer on death account (TOD), a joint ownership, or a simple deed, it is easier to have an elderly loved one sign a single document like a trust instead of trying to have him or her pass the scrutiny of two witnesses and a notary, as required for a will.

Estate planning strategies need to be properly created well in advance of death by an experienced estate planning attorney at Cottrell & Jacobs. This helps to avoid an estate battle and a splintered family.

For more information about Estate Planning please visit our website.

Reference: (Pauls Valley OK) PV Democrat ((September 27, 2017) “Avoiding probate - panacea or problem”

Pitfalls of D-I-Y Estate Planning – West Michigan

The intention of doing an estate plan on your own, is rarely to create a massive headache for family members. However, that is very often exactly what happens.

Certain areas of the law are more complicated than others. The tax law is one of the more complex ones. That’s one of the many reasons why estate planning requires the help of a professional, especially when it comes to transferring wealth to the next generation.

The experienced and skillful legal counsel of a knowledgeable estate planning and tax attorney can make the difference between an estate that is smoothly managed and a disaster that takes years and significant costs to untangle.

Axcess News recently published an article, “The Very Real Dangers Of Doing Your Own Estate Planning” that details the major issues that people experience when they try to do this type of thing on their own.

Those with simple estates don’t need a great deal of estate planning, but they still need some. This may include a will, healthcare directive and a power of attorney. People try to create these documents on their own, searching online for a free template or a paid program. Many people who elect to go online to save money, wind up spending more than they anticipated, or they end up with a defective estate plan that only creates more issues for their family, once they’ve passed away. The web will might work out just perfectly for some, but others risk much more than they save.

A common issue is trying to determine if a simple estate plan will be enough for a person’s specific situation. Your situation can be complicated if your spouse has already passed, if you have children, if you own real estate or if you’ve been divorced and remarried. If any of these apply, the best bet is to sit down with an experienced estate planning attorney. The free web solution just won’t cut it.

You may need a trust. That’s a sophisticated task that definitely requires legal expertise because a simple mistake can make the trust null and void. A qualified local estate planning attorney will understand the details of the law and your situation. He or she will guide you into making the right choices for you and your loved ones. If your do-it-yourself estate plan has an error or flaw, the legacy you wanted to leave to your family may be challenged in court.

For those whose estates are worth millions, the possibility of giving a large portion over to the government in taxes should be enough motivation to contact an experienced estate planning attorney at Cottrell & Jacobs. He or she will know the tax laws, the strategies and how to manage the process.

For more information about Estate Planning please visit our website.

Reference: Axcess News (August 2017) “The Very Real Dangers of Doing Your Own Estate Planning”

Key Insights into Long Term Care Planning – West Michigan

We like to think that we will never need this type of care, but the truth is, at some point, most of us will.

Denial is how many Americans deal with planning for long-term care, according to an article in HomeCare, “5 Ways to Sort Through Long-term Care Planning.” Unfortunately, the rising costs of care makes this a serious problem for seniors who fail to plan properly.

Roughly 70% of Americans 65 and older will require some type of long-term care. But few do enough or anything at all to plan for this. This is critical, with assisted living costs increasing faster than the pace of inflation. For those who are looking to move into a private-pay assisted living community, the median cost of rent and care in the U.S. is about $50,000 a year.

Finding the money to support senior care needs is difficult, but not impossible. Start with the following:

1. Inventory and Find Ways to Maximize Assets. Consider the value of your assets, like your home and your savings, then calculate your anticipated senior care costs. This includes things like the cost of living with inflation, medical expenses associated with illnesses you may have and the costs of different types of care—like memory care, homecare, nursing care, assisted living and long-term care communities and other family circumstances.
2. Look at Other Factors Concerning Senior Care. Smart strategies include financial planning, but also legal planning—like a will, powers of attorney, and a living trust to protect yourself and your family, and emotional planning, which includes leaving a legacy for your family or managing family dynamics.
3. Conduct Research. There’s plenty of misinformation about senior care, but education can help eliminate misconceptions. The best source is a knowledgeable estate planning and elder law attorney. Some people think that lawyers just draft documents. However, the documents are really just part of the legal service. There’s also the time, effort, and advice that goes into the document, working to address an individual’s unique circumstances.
4. Work with Professionals Who Can Provide Support. When it comes to senior care, you’ll need advice from several professionals, such as your family doctor, your financial advisor, an insurance agent or broker and your attorney. You may also work with a geriatric social worker.
5. Talk with Family Members. Having what may be difficult conversations in advance, will ensure that your family members understand what your wishes are and how you want be cared for, if an illness should strike that leaves you unable to communicate. This is not a topic that can be ignored.

An experienced estate planning attorney at Cottrell & Jacobs will be able to guide you through the process of planning for long term care, identifying resources and making recommendations, whether for yourself or for your parents.

Reference: HomeCare (July 2017) “5 Ways to Sort Through Long-term Care Planning”

For more information about Estate Planning please visit our website.

Do Singles Need Estate Planning More Than Couples? – West Michigan

Singles, especially those without children, might think that they don’t need to have an estate plan. However, it is important to remember that estate planning is for when you are incapacitated, as well as asset distribution.

While some tasks for estate and retirement planning for singles are the same as for couples, a recent article in Forbes, “5 Financial Planning Strategies For Singles,” notes that singles need to prepare for medical and financial emergencies. While a spouse is not a guarantee that these issues will be handled to a person’s liking, a single adult needs to be more self-reliant and that means planning in advance.

Start saving for retirement now. Many of us will bank on Social Security along with our own personal savings in retirement. Some may have a pension or will possibly continue working in retirement. Whatever the exact plan, a good retirement savings objective is 15% of your salary and include your employer match, if you get one in your 401(k) plan. If you don’t have a plan through work, consider starting a personal IRA.

Prepare for the unexpected. Singles don’t have the luxury of second income as a fall back, so build up an emergency fund that can cover three to six months of expenses. Singles should aim toward the six-month cushion, so any unexpected expenses can be paid off without having to use your credit cards or retirement savings. Keep the money in a liquid account.

Consider insurance. Life insurance can be a replacement income for those who depend on you. With no dependents, it might not be needed, but consider a small policy to cover funeral expenses.

Estate planning. Perhaps you think you don’t need an estate plan because you’re single.  However, you should have certain documents prepared, if you become incapacitated, so a trusted friend can make health and financial decisions on your behalf. This document is called a health care proxy or a durable medical power of attorney. You need this, along with an advance health care directive and a durable power of attorney for financial and legal matters.

For single parents of minor children, a will should be used to designate a guardian for them. Make sure that your beneficiary designations are up to date, since most of your assets are likely in your own name. The beneficiary designations will be in force, regardless of any wishes expressed in a will. You should also review your life insurance policies and retirement accounts. You might consider titling some of your accounts to “transfer on death” to ensure a relatively smooth transfer to another person.

Talk with an experienced estate planning attorney at Cottrell & Jacobs, who will be able to help you set up an estate plan to protect you and any heirs. Don’t forget to speak with family members or trusted friends, so that they know your wishes.

Reference: Forbes (July 5, 2017) “5 Financial Planning Strategies For Singles”

For more information about Estate Planning please visit our website.

Power of Attorney and Anticipated Inheritance from a Relative Who Lives in Another State – West Michigan

If someone has designated you as their agent with a Power of Attorney, it’s important to understand what this legal document does and does not empower you to do.

A Power of Attorney (POA) gives you the legal right to manage a person’s financial affairs while they are alive, according to an article on NJ.com, “Inheriting money from out-of-state relative.” What most people don’t realize is that the POA is only in effect, while the person who named you their agent is living.

When the person dies and you are the beneficiary, you’ll need to know what your tax liability may be.

There are two distinct types of taxes that may be imposed by a state where the person is a resident at the time of their death. An estate tax may be required to be paid on the estate of an individual before the property is transferred to the beneficiary. There is also the inheritance tax. This tax is imposed on certain individuals who inherit property from an estate. Whether a state estate tax or inheritance tax must be paid, is dependent on the laws of the state where the person was a resident at the time of death, not the state where the beneficiary lives.

The estate of a person who is a resident of New York and dies between April 1, 2017 and Dec. 31, 2018 is subject to a New York estate tax, only if the value of the estate exceeds $5.25 million. On January 1, 2019, the New York estate tax exemption will equal the federal estate tax exemption. It is anticipated to be about $5.9 million.

In some states, the relationship between the testator and the heirs may make them subject to an inheritance tax.

If the relative, for example, owns real property in New Jersey, there’s an inheritance tax of 15% imposed by the state on the value of that real property. When a person inherits the estate assets, there would be a step-up in basis for any appreciated assets. This means that there shouldn’t be any capital gains tax on those assets, if they’re disposed of for the date of death values.

An estate planning attorney at Cottrell & Jacobs will be able to help you work through the tax consequences and the practical steps that need to be taken, when inheriting assets from a family member who lives in a different state.

Reference: NJ.com (June 6, 2017) “Inheriting money from out-of-state relative”

For more information about Estate Planning please visit our website.

How Do You Do Estate Planning if You Don’t Have any Heirs? – West Michigan

Certain decisions are easier and others are more difficult, if someone has no heirs. However, you still need an estate plan to protect yourself in case of incapacity.

If you’ve never had children, then deciding how assets should be distributed and who to distribute them to could lead you to decide to support groups that have meaning to you. A harder decision is who to appoint as a decision maker for medical and financial decisions if you do not have a spouse or children.

CNBC’s recent article, “Planning your estate when you've got no children or heirs,” says there may be no close family members, resulting in questions of who they should leave their estate to. These people often don't know who to name as executor of their will or who to trust to make decisions for them, in the event that they become incapacitated.

Studies show that most childless people don’t make out a will. The issue with having no will (or “dying intestate”) is that the state will decides who gets your assets. Therefore, it is recommended that for those with no family ties or close friends, to focus on your interests and tie them to charitable giving. You can immediately establish your legacy and enjoy it while still living.

Another tough decision is choosing someone to have medical power of attorney, which allows that person to make important health-care decisions if you’re unable to do so. Married couples will usually name each other as their health-care proxy, but after the death of one spouse, the other with no children has the challenge of naming someone else. The same is true for childless singles who never married.

Likewise, a living will details your wishes if you’re on life support or suffer from a terminal illness. It also instructs your proxy's decision making. You also should give someone durable power of attorney to act as your agent if you’re unable to handle your finances. You can designate different people to handle healthcare and financial decisions.

You also need to designate someone to be the executor for your estate. This can be challenging for those without any family. The executor or “personal representative” has the legal authority to handle your estate. It should be someone you trust and someone who has the bandwidth to take on this responsibility.

If you can’t think of a person to name, your bank's trust division may be willing to serve as executor. You may also consider setting up a trust. Remember that some assets have beneficiaries, like 401(k) plans and life insurance policies. These accounts don’t pass through the will.

Whether or not you have children, or a spouse, you still need an estate plan to protect yourself while you are living. An experienced estate planning attorney at Cottrell & Jacobs can help you make the necessary preparations, including making the distribution of assets meaningful.

Reference: CNBC (May 31. 2017) “Planning your estate when you've got no children or heirs”

Address These Four Concerns for Blended Family Finances – West Michigan

Blending a family is not an easy task, but doing so successfully can create a new and strong family unit. Among the challenges are how to blend finances.

Blended families are no longer limited to television sitcoms. The Pew Research Center reports that 41% of all Americans have at least one step-relative of one kind or another. As many as 1,300 new stepfamilies or blended families are created daily, according to the Stepfamily Foundation. But blending families includes decisions about finances, and that includes estate planning issues.

The Miami (OK) New-Record’s recent article, “4 tips to resolve financial concerns in stepfamilies,” provides some tips and answers for issues within stepfamilies.

1. Types of accounts should be defined. A major issue for stepfamilies can be how to split finances into “yours,” “mine” or “ours.” Any combination of accounts can be just fine, but spouses should clarify the rules at the start to avoid confusion. Financial circumstances can change, so couples should review their program regularly to make sure that they have the best approach for their situation.
2. Keep documents up-to-date. After remarrying, review the beneficiaries of life insurance, pensions, and other financial accounts. It is also important to create or update a durable power of attorney, living will or a healthcare proxy to name a person to make decisions, in case of incapacity.
3. Modify your will. Inheritance issues can make children and spouses concerned about their financial futures. With that reality, a newly remarried couple should draft wills and revise any existing wills to address important estate planning issues. Wills must state, as specifically as possible, what each beneficiary will inherit. This helps minimize potential squabbles among siblings and also between the surviving spouse and children from an earlier marriage. Step-children aren’t usually considered your legal heirs, so they may not inherit if you pass away without a will containing specific provisions for them.
4. Talk with professionals. An experienced estate planning attorney at Cottrell & Jacobs will have had experience with the unique challenges facing blended families. Discuss the use of trusts, or purchasing additional life insurance to ensure that all of the children are properly protected. Be open to the discussions and to communicating with parents and children to help further the final goal: a happily blended family that remains a family after the parents have passed.

Reference: Miami (OK) New-Record (May 20, 2017) “4 tips to resolve financial concerns in stepfamilies”

For more information about Estate Planning please visit our website.

Questions Raised About Authenticity of Documents Used by Heir Locator – West Michigan

By traveling to Eastern Europe and obtaining documents thought to be long-gone, a genealogist has built a profitable business finding lost heirs. However, a court appointed lawyer reviewing his documents on one case says they are likely forgeries.

Vadim Tevelev may be a hero to those who retain his services to prove kinship for Surrogate’s Court cases. However, according to the New York Daily News, there are serious questions about the documents and genealogical records that he has provided in many cases.

The article, “Genealogist who helps heirs obtain fortunes in estate cases accused of using forged documents,” reports that Tevelev is working on behalf of a Russian-born New Jersey woman to win her part of an $8 million fortune left behind by Isaac Kramer, a Brooklyn lawyer who died in 2008 at the age of 94. However, some estate lawyers and genealogy experts have said that the family trees and genealogical records Tevelev submits as proof of kinship are not always 100% real.

A court-appointed lawyer reviewing the case said that the Ukrainian birth records Tevelev submitted were probably fakes. Roger Olson wrote in his report for a Brooklyn Surrogate’s Court judge that Tevelev has been involved in other cases where genealogical records were called into question.

Tevelev currently represents Elizabeth Hovav. He says Hovav is Kramer’s first cousin once removed and is entitled to some of the decedent’s estate. As in other estate cases, he has power of attorney for Hovav and her interest in the estate. If he’s successful in proving kinship, he typically receives a commission of one-third of the inheritance. However, Hovav and 36 other alleged relatives of Kramer have battled in the courts over the estate for almost nine years. The attorneys for the other Kramer relatives also question the validity of the documents that Tevelev has submitted over the years.

Olson obtained a 2013 report by the public prosecutor’s office in Lviv, Ukraine, which said a civil servant had pleaded guilty to forging records that showed Hovav’s mother was born in Lviv and to falsifying the identities of Hovav’s grandparents. Hovav’s mother was actually from St. Petersburg, Russia. The public prosecutor’s report also says the forgeries were made for unidentified people to get money from Kramer’s estate.

Tevelev also submitted records from the central archive of Russia’s federal security service that said Hovav’s grandparents were arrested in 1947 and executed. However, Olson reported that he obtained a letter from the federal security service that showed it had no records of Hovav’s grandparents and had never provided such a document.

Tevelev’s attorney said that Ukraine’s National Police Department later conducted its own investigation into the civil servant’s alleged forgery in 2016 and decided that no crime had occurred. But the police also said that evidence in the case had been lost because of the 2014 riots in Ukraine.

Tevelev, who lives in New Jersey, but was born in Russia, said he’s been an “heir hunter” since 1991. He said he considered himself a specialist in foreign documents and locating people overseas.

Tevelev and Hovav are still likely to get significant payouts from the Kramer estate, no matter how accurate Olson’s report is. The attorneys for all of the alleged relatives involved in this matter have requested that a judge let them reach a settlement among themselves. They have apparently chosen to overlook the issue of forgery altogether. According to court filings, one possible deal being examined would give Hovav as much as $300,000.

For more information about Estate Planning please visit our website.

Reference: New York Daily News (May 15, 2017) “Genealogist who helps heirs obtain fortunes in estate cases accused of using forged documents”

Estate Planning Priorities to Protect Loved Ones – West Michigan

Estate planning is something that young families need to do just as much as their parents or grandparents. Estate planning is about far more than asset distribution.

Did you know that estate planning includes naming guardians for minor children in the event that both of their parents die before the children become of legal age? Most people don’t understand that when tragedy strikes and there is no will, guardianship is assigned by the court and not by trusted family members.

Estate planning isn’t just a topic for older people. It’s for young families with children, often the least prepared and most vulnerable in the absence of a will.

Planning your estate doesn’t mean you must have significant assets. Even if you are making a decent living, you still need to protect your family's future, like your home equity and your family's ability to maintain their lifestyle if you are gone. This requires you to take some simple steps now to avoid long and costly probate court proceedings.

The Chicago Tribune’s article, “5 essential steps of estate planning,” lists some things you should be doing now, before things get complicated.

Make decisions on who gets what. Create a list of your assets, how you want them distributed and the names of the person(s) appointed to carry out your wishes.

Visit a local estate planning attorney and do it correctly. This is not a do-it-yourself project with documents found online. If you make a mistake, you won't be around to correct it by the time it is discovered. Instead, engage an experienced estate planning attorney at Cottrell & Jacobs.

Learn about your estate plan options. Talk with your attorney about a will or a revocable living trust. A will must go through probate before assets can be distributed. If you create a revocable living trust, name yourself as trustee while you are alive and capable. If you pass away or become incapacitated, you have a successor trustee to take over so that he or she won’t have to go to probate court to be empowered to carry out your written instructions. With a trust, you must re-title your assets in the name of your trust.

Look at your health care issues. You never know if illness will take away your ability to make decisions. Select a trusted friend or family member to be your healthcare power of attorney. You should also make a living will to express your thoughts on any treatment required to prolong your life, as well as your desires for organ donation.

Think about your funeral wishes. Write these instructions down and place them in a spot where they can be found before your will is read. This usually takes place after the funeral is held.

Finally, don’t leave the process in mid-stream. Documents need to be signed and trust accounts need to be funded. If there are changes made to property ownership, titles need to be updated. You should also remember to tell key family members where documents are located and to provide contact information for your estate planning attorney. Making this easier for your surviving family members will be appreciated and remembered long after you are gone.

For more information about Estate Planning please visit our website.

Reference: Chicago Tribune (May 8, 2017) “5 essential steps of estate planning”

First Responders Need Living Wills as Much as Their Patients – West Michigan

First responders may seem cold-hearted about DNRs and patient family members who are unprepared for the hard decisions that EMTs deal with every day.

Part of being a first responder is helping people and their families during a crisis, when a serious injury or illness or death results in a call to 911. But members of the first responder community are just as likely not to have a living will as the patients they see.

EMS1.com recently posted a story, “Why EMS providers need living wills.” It explains that a living will—contrary to most other estate planning documents—has no authority after the creator of the document passes away. A living will or advance directive provides instructions about your end-of-life care. It can include as much or as little direction as you want, such as the use of pain-relieving treatments, do not resuscitate (DNR) orders, life support and organ donation.

A living will helps your family members carry out your wishes. However, it often doesn’t cover everything. For instance, if you don’t specify whether you’d want certain life-saving treatments, like emergency surgery in the living will, you should have a trusted agent to act in your best interests and help you to carry out your wishes.

First responders need both a health care power of attorney and a living will. Due to the high risk of serious injury that comes with a first responders’ duties, it is even more imperative to have this advanced planning in place. In many states, the health care power of attorney is part of the living will. The agent or the “health care proxy” has the authority to act on behalf of the incapacitated first responder, if the first responder is incapable of making decisions on his or her own.

But why do I need a living will?

Be in control of your end-of-life decisions. Without a living will, the decisions to carry out your last wishes could be made by the court. In this situation, state law takes effect and dictates who will have a say in your well-being. A living will lets you control how decisions are made and who will make them.

Protect your life partner. Without a living will, the law will place the health care power of attorney in the hands of your spouse, and then your family. If you have a long-time partner, but are unmarried, your partner would have no say in any end-of-life decisions.

Select one of your children to assist. With a health care power of attorney, you eliminate confusion as to which of your children will make the decisions to enforce your living will and decisions on end-of-life care.

Peace of mind. A living will gives you and your loved ones comfort and peace of mind. This is a stressful time, and a living will helps smooth out the logistics and questions that will arise.

Organ donation. You can state your instructions for organ donations in a living will.

When there is no living will, or if the living will is not on site and with the patient, decisions for a loved one who is near death become even more challenging. Without it, first responders must act following the law, which usually means resuscitating the patient, whether the patient wants this or not. With a living will, family members and first responders will know what you want and will be able to comply with your wishes. This prevents a great deal of confusion and heartache for all.

Reference: EMS1.com (May 6, 2017) “Why EMS providers need living wills”

For more information about Estate Planning please visit our website.